The Benefits of On-Premises Storage Versus Cloud Storage

Regardless of the sector in which an enterprise operates, it most likely uses data. Today, it’s highly rare for any organization to function without data. A few of the most data-intensive industries include healthcare, financial, and retail. Organizations in these industries use data for all sorts of things—they’re only restricted by the amount of data they have to process.

For the most part, organizations use two distinct types of data storage solutions: on-premise storage and cloud-based storage. Computing hardware and software are improving, allowing enterprises to collect, produce, and process even more data. As the proliferation of the Internet of Things (IoT) devices continue to expand globally, organizations will have enormous amounts of data available to them.

This is solidified by a study conducted by IDC Research, which predicts the volume of data generated by connected IoT devices will increase exponentially at an annual growth rate (CAGR) of nearly 28 percent between 2018 and 2025. Video surveillance applications generate a significant amount of that data, yet other categories such as medical, industrial, education, among a growing list of others will undoubtedly generate even more data over time.

On-Premise Storage Versus Cloud Storage

As the term suggests, “on-premise” storage relates to local hardware storage devices. In other words, organizational data is stored on computers, servers, and other devices owned and managed by an organization. For example, a company purchases a server for storing its data. Usually, the server will be set up at the company’s headquarters where data is uploaded. This server would be considered an on-premise data storage device since it’s locally operated.

Local data storage devices like servers and data storage arrays cost a lot of money to operate and maintain—purchasing a server and the required software oftentimes costs thousands of dollars. On top of that, organizations usually hire an information technology (IT) firm to set storage devices up, which costs an additional $1,000 or more. Additionally, unlike other technologies (desktop computers, IoT devices, etc.), storage devices have a limited life span of roughly six years or so. Thus, the process of purchasing on-premise storage devices becomes a perpetual one.

On-premise software and hardware are considered capital expenditures and might not be tax-deductible. However, several states have passed legislation giving tax breaks to companies operating data centers.

The most significant advantage of on-premise storage devices lies in their security. In 2017, Risk Based Security published a report entitled Data Breach QuickView that revealed 4.2 billion records were exposed in data breaches in 2016. The primary sources of these breaches were Yahoo, Myspace, and FriendFinder Networks—all of which accounted for approximately 2.2 billion of the personal and commercial records compromised.

What do those companies all have in common? Their third party services. And while individual organizations come under attack often enough, it’s far less frequent as compared to cloud-based services. A good way to look at it is cloud services like Yahoo! always operate with a big target on its back. On the other hand, smaller, individual organizations operating on-premise storage make smaller, nondescript targets—unless cyber-criminals specifically search them out, it’s highly unlikely they will randomly stumble upon them.

Cloud Storage

Contrasting the cost of on-premise cloud-based storage is misleading for many largely due to erroneous assumptions. For example, people generally believe that cloud storage is more economical than on-premise storage. Many organizations eventually learn the cold reality: costs aren’t as straightforward as touted. Whether one chooses on-premise or cloud-based storage, they both require careful consideration. For example, unlike on-premise data storage, cloud storage (software and resources) is considered an operational expense and is tax-deductible for certain businesses.

According to Freshbooks, sole proprietorships are allowed to write off expenses related to cloud storage and cloud accounting software. In a guide published by Oracle, a meager 18 percent of enterprises were able to maximize the benefits of using cloud-based storage. The primary reason behind this lies in the various organizational cost structures which complicate tax calculations.

For many IT managers looking to save money, pay-as-you-go offerings seem promising—until idle resources (such as virtual machines) run unmonitored (and quite possibly forgotten or overlooked) for hundreds if not thousands of hours. Prepaid public cloud storage capacity also attracts people because it seems less expensive than the pay-as-you-go model. However, pre-paying for unused resources results in wasted funds as well.

For organizations that have enough capital, investing in building a private cloud storage facility blends on-premise control over data, infrastructure, and IT security with the flexibility of cloud technology. Just like public cloud storage, private cloud storage solutions offer the potential to dynamically scale resources up or down as needed. But unlike public cloud storage, private cloud storage resides within an organization’s onsite data center, users so don’t experience performance degradation.

Private cloud storage isn’t without its downsides, nonetheless. For one thing, the level of security one will be able to provide totally depends on their IT security expertise. As the old saying goes, “You’re only as strong as the weakest link.” Secondly, scalability is also dependent on the amount of capital an organization has available. Thirdly, while compliance is more easily achieved with a private cloud, it’s often accompanied by insufficient internal controls. Lastly, privately operated cloud storage should still have an external back up. This adds even more money for upfront costs as well as for upkeep.

If you’re interested in learning more about this topic or about RAID Inc. data storage solutions, talk to one of our storage experts today.